A New Approach to Hospital Staffing: Enhancing Care and Efficiency with David Aaron Rosen, founder and CEO of Open Source MD

[00:00:02] Hey everyone, welcome back to Outcomes Rocket, Founder Stories. So excited that you tuned in to another amazing episode because today I've got the privilege of hosting Dr. David Rosen on the podcast. He is the founder and CEO of Open Source MD. He's just an incredible leader and physician. He earned his degree in cell and molecular biology from Tulane University before pursuing his career in medicine.

[00:00:30] He also obtained a Master's of Public Health with a concentration in nutrition, which as you all know is very unique in healthcare. Not a lot of our physicians get that type of training. You know, his unique perspective really kind of led to an opportunity to start a new way of delivering care that's both good for health systems, but also for physicians and patients. So I'm excited to uncover what he's doing with that. David, I want to welcome you to the podcast. Thanks for joining us.

[00:00:59] David Aaron Thank you, Saul.

[00:00:59] David Aaron Hey, it's a pleasure, man. So look, let's dig in. Before we obviously unpack what Open Source MD is and what you guys do there, talk to us a little bit about you. What is it that got you into healthcare and entrepreneurship?

[00:01:13] David Aaron So, well, I guess from a healthcare perspective, what drew me to medicine was I had a first cousin that had leukemia as a kid. And so I was very much drawn to, we had a very close relationship. He ended up passing from it. And essentially,

[00:01:29] David Aaron So, you know, I really had this calling just that was born out of this relationship. And so, you know, I went to college, got a degree in biology. And as I was sort of trying to figure myself out what I wanted to do, ultimately, I decided to go into medicine.

[00:02:13] David Aaron

[00:02:43] David Aaron

[00:03:12] David Aaron

[00:03:14] David Aaron That's cool, man. Yeah. And as a hospitalist, there is that flow and you got your high season and you got your low season. And so it's an economics 101 problem of supply and demand. And so you and I have had a chance to connect prior to the podcast. I've gotten a peek into kind of what you do, which is really unique. So, you know, let's help the listeners and viewers understand what Open Source MD does to solve for that problem.

[00:04:10] David Aaron

[00:04:40] David Aaron

[00:04:41] David Aaron So, the doctors have certain designated shifts that we build out. And that's it. There's no money transacted. The doctors separately practices as an independent contractor through their own business entity. And that business entity contracts with the hospital for medical services.

[00:05:26] David Aaron

[00:05:28] David Aaron Aaron

[00:05:59] David Aaron Aaron Aaron

[00:06:00] David Aaron Aaron Aaron Aaron

[00:06:00] Financialing, insurance, housing, transportation.

[00:06:03] Correct.

[00:06:03] Makes a lot of sense.

[00:06:05] You showed me some of the houses that you guys lodge in.

[00:06:10] Talk to us about that.

[00:06:11] I thought that was pretty fresh and unique.

[00:06:13] Yeah, so we try to find very unique, cool places.

[00:06:18] The first place, which I think I sent pictures of,

[00:06:20] was the upstairs.

[00:06:23] If you think about it, it's like a typical Main Street

[00:06:25] with those buildings that are all next to each other.

[00:06:27] And it was the upstairs above a lawyer's office who owned the whole building.

[00:06:30] And he completely redid it, decked it out.

[00:06:33] And it was this old industrial look with reclaimed wood,

[00:06:37] three bedrooms, and a walk-in shower without any doors, the whole thing.

[00:06:42] And the idea is when we build these models out,

[00:06:45] we create staffing grids where the doctors actually work a lot more hours

[00:06:50] than a typical standard work week.

[00:06:52] And so they need a place that's very comfortable,

[00:06:55] a place where they can have lunch and dinner and be able to rest

[00:06:58] and not feel like they're in some hotel or anything like that.

[00:07:02] These are residences.

[00:07:03] We actually have a concierge that takes care of the place.

[00:07:06] The concierge cooks meals or prepares meals.

[00:07:09] The doctors actually fill out a survey ahead of time

[00:07:11] and make requests on what kind of food items they would like to see.

[00:07:15] And that's part of their service fee.

[00:07:17] And so when they go up and work, it's almost like a second home.

[00:07:20] They have a bin with their clothes and toiletries that the concierge puts out at the beginning of their week

[00:07:25] and then it's put up at the end of their week so they don't have to travel with a big suitcase.

[00:07:28] And it makes it a really nice living experience when you're working these very long hours.

[00:07:32] That's cool, man.

[00:07:33] I mean, it's different.

[00:07:35] And what is typically done, David?

[00:07:36] Is it typically like hotels for shorter periods of time?

[00:07:40] Like, give us the contrast.

[00:07:42] As far as our company versus, say, a locum tenants company or...

[00:07:47] Yeah, yeah.

[00:07:47] Yeah, locum tenants or how it's typically done.

[00:07:50] How is it different?

[00:07:50] Yeah, so with a locums company, those contracts are very expensive.

[00:07:54] So the idea is that the hospital really wants to get to an employed service, but they need a bridge.

[00:08:01] And so they'll find a temp agency or a locums company.

[00:08:05] They pay that locums company probably an extra 30% on the dollar as far as cost.

[00:08:11] And then the locums company pays the doctor.

[00:08:14] The doctor will work these shifts that are just wherever there's holes in the schedule.

[00:08:19] And then at the end of that week, the doctor submits a timesheet and the locums agency gives

[00:08:23] the doctor a portion of whatever they received from the hospital.

[00:08:27] And then to add to that, the expenses of travel, lodging, all that kind of stuff is passed on

[00:08:33] to the hospital.

[00:08:34] So they're very expensive.

[00:08:35] So in a typical locums contract, there's a 30-day out clause.

[00:08:39] So once the hospital is able to find doctors, they can call off the locums physician and just

[00:08:46] cut their costs down significantly.

[00:08:48] Whereas with us, the hourly rate is commiserate with what it would cost to truly employ a physician.

[00:08:53] So if you factor in payroll taxes, all the benefits, insurances, et cetera, PTO, you can figure

[00:08:59] out an hourly rate.

[00:09:00] And that's what the doctors are paid.

[00:09:03] And so it's budget neutral turnkey.

[00:09:05] It's very easy for a hospital to find and secure staffing.

[00:09:08] The reason we have the lodging, because a lot of people think, well, why have lodging?

[00:09:13] Why not just get the doctors to just move there?

[00:09:16] The reason is, is that recruitment is always a challenge.

[00:09:19] Physicians have families.

[00:09:21] They may have personal reasons they can't move, but they're willing to work at that hospital.

[00:09:25] And so what they can do is they travel up on a Tuesday.

[00:09:29] They work their standard seven-day block.

[00:09:31] It's almost like a seven-and-a-half-day block.

[00:09:33] And then at the end of the work week, they go home.

[00:09:36] What attracts them to this model, why travel if you're going to get paid?

[00:09:40] A rate that is what a W-2 would be paid is that they actually make a lot more money through

[00:09:46] working more hours.

[00:09:48] So we create a very unique staffing model where we break up evening or night hours and add

[00:09:55] them to day hours so that from a budget standpoint, the cost is the same for the hospital, but

[00:10:00] the doctor is actually able to work more hours.

[00:10:03] What does that mean?

[00:10:04] So for example, if I'm recruiting a doctor and they say, listen, I want a $10 an hour pay

[00:10:10] raise.

[00:10:10] That's really important to me.

[00:10:11] I feel like what you're offering is a little bit on the low side if I have to cover my own

[00:10:15] expenses.

[00:10:16] And so I say, think of it this way.

[00:10:18] $10 an hour over a 12-hour period is $120.

[00:10:21] If you work one more hour, you've already beaten it.

[00:10:24] If you work four more hours, you're really making significant money.

[00:10:28] And over the course of a year, it's substantial increase in money.

[00:10:33] And then working as a 1099 contractor through our partners where there's tax strategy, you

[00:10:38] can really reduce your tax liabilities.

[00:10:40] So your net income is a lot more.

[00:10:42] The doctors that work with us also understand that when they work a standard 12-hour shift,

[00:10:49] which is what a typical doctor, a hospitalist will work, their day is already shot.

[00:10:54] They're not really going to see their kids.

[00:10:56] And so what they internalize and understand is that why not just go to a place, maximize

[00:11:02] your hours, maximize your income.

[00:11:04] And then when you're off, you're really off.

[00:11:06] And maybe you can even have more time off at home.

[00:11:09] And so it really is an attractive point.

[00:11:11] The monetary side really incentivizes physicians to work with us.

[00:11:14] From the hospital side, why allow these unique hours?

[00:11:19] Like what's in it for them?

[00:11:20] And what's in it is that we reduce fragmentation care.

[00:11:25] So I still practice as a hospitalist.

[00:11:27] When I admit a patient at nine o'clock at night out of the ER, I see the same patient the next

[00:11:32] day.

[00:11:32] So we don't rebalance lists.

[00:11:34] We don't try to shuffle patients with different doctors.

[00:11:37] We all start on a Tuesday and we rotate admissions.

[00:11:40] And so when you have much less fragmentation in care, care plans are set at the beginning

[00:11:46] of the hospital stay.

[00:11:47] The patient is seeing the same doctor for the most part, other than those Tuesdays when

[00:11:51] we transition the service.

[00:11:53] These extended hours actually allow for time to document well.

[00:11:57] There's not this idea of round and go where in a lot of big systems, the hospitalists will

[00:12:02] just blow through their patients in the morning, just get through their notes as quickly

[00:12:06] as possible and get home.

[00:12:07] That's not our model.

[00:12:08] So there's a focus on documentation being available for the patient and family throughout

[00:12:14] the day.

[00:12:14] So if a patient gets sick in the evening, we're there.

[00:12:18] And the same doctor that had seen the patient earlier in the day is the one that's seeing

[00:12:21] that patient that evening.

[00:12:23] So you have a lot more consistency.

[00:12:25] And that has translated into significant improvement in quality.

[00:12:30] And that has led to the hospitals we work with to dramatically increase their revenue.

[00:12:35] Everywhere we've been, the hospitals have had significant improvement in their metrics and

[00:12:40] in their bottom line.

[00:12:41] Well, I think that's great, David.

[00:12:43] It's a win, win, win for everyone.

[00:12:45] And so look, as an entrepreneur, you're building something because you feel like there's a need

[00:12:50] and you want that need addressed.

[00:12:52] It's not always as easy as you think it's going to be.

[00:12:56] We all run into obstacles.

[00:12:57] What's one of those obstacles that's come up for you that's been a challenge?

[00:13:01] You've overcome it, but it's made you better.

[00:13:04] Oh, I would say running the company.

[00:13:06] Well, there's a lot of things.

[00:13:08] So running the company obviously has been a challenge because I'm running a company and

[00:13:12] practicing at the same time.

[00:13:13] So certainly that's a challenge.

[00:13:14] From a financial standpoint, our company doesn't have any debt.

[00:13:18] We've always operated at a profit.

[00:13:20] The biggest challenge we have is hospitals buying into the model and even some doctors

[00:13:26] that I try to recruit.

[00:13:27] So for example, hospitals think, oh, if the doctors just live here and they work the standard

[00:13:32] model, the round and go where we can keep them, you know, maybe they actually put eight

[00:13:36] hours in, but we'll pay them for 12.

[00:13:38] It's sort of a gimmick that hospitals have.

[00:13:39] That that somehow is good and convincing them that actually the hospital's mission is to

[00:13:47] provide good quality health care to the communities they serve should be, that is their mission.

[00:13:53] And that that should be the focus of anything that they do as far as managing their workforce,

[00:13:57] in this case, the physicians.

[00:13:59] When you fragment care in the way they do and the doctors are not really vested, that's a

[00:14:04] problem.

[00:14:04] It really doesn't meet their core mission.

[00:14:06] I know hospitals want to make money.

[00:14:08] They want to grow, you know, through M&A, they want to buy other hospitals.

[00:14:11] But really, at the end of the day, they're supposed to provide high quality health care.

[00:14:17] So convincing them that maybe not doing the standard model and then trying something

[00:14:24] unique is actually in their best interest because you have continuity, you have consistency.

[00:14:30] They're contractors, so you don't have all of the labor laws that sort of make it hard

[00:14:34] to get rid of a doctor that's not performing.

[00:14:36] So the doctors are naturally forced to compete for shifts.

[00:14:39] And it really, it sort of follows that old adage that rising tides lift all boats, that

[00:14:45] everybody can really win if everybody plays, you know, in a sandbox nicely.

[00:14:49] But hospitals really, they don't really think outside the box and want to try something unique.

[00:14:55] The other thing what we try to convince them is, is that why work with contractors?

[00:14:59] Why not just W-2 employ everybody?

[00:15:01] And the reason is, is that because of the seasonality of the business, it's very hard to flex a workforce

[00:15:07] if everybody is W-2 employed.

[00:15:09] You know, when you're employed, you have to offer the same number of shifts per pay period.

[00:15:13] A typical seven-on-seven-off model is 182 shifts per year.

[00:15:17] So if you try to increase your staffing with your existing workforce in the wintertime, they're going

[00:15:23] to end up working out their contract.

[00:15:25] And then you're either going to have to pay extra for doctors to work additional shifts,

[00:15:29] or you're going to be short somewhere else later in the year.

[00:15:32] And, you know, having contractors that aren't subjected to that, they can work two weeks in

[00:15:37] a row or they can take a month off.

[00:15:39] You know, you have a lot more flexibility when you have a pool of physicians that's even larger

[00:15:44] than what you really need to staff a program.

[00:15:47] It gives that program the ability to adapt.

[00:15:49] And hospitals really just, they struggle with, you know, should they use contractors?

[00:15:53] If you do have contractors, how can you use them?

[00:15:56] How do you flex that staff?

[00:15:57] And they don't want us, our company, to really be involved in the administration of that program,

[00:16:03] especially in these bigger systems where we supplement the service.

[00:16:06] So I would say that's the biggest challenge.

[00:16:07] On the physician side, invariably, they always are scared about working longer hours than

[00:16:13] this typical 12s.

[00:16:14] They worry about burnout and all this other stuff.

[00:16:17] And what I always explain to them is that our contracts actually have curbs in them to

[00:16:22] actually ensure some protections on workload.

[00:16:25] And so what we tell a hospital in our contract with them, and it's actually listed in the contract

[00:16:30] is we expect three things.

[00:16:32] One is longevity.

[00:16:33] So the doctors want to know that they're not getting called off.

[00:16:35] So they can expect that their shifts are going to be there for them to work.

[00:16:39] Two is reasonable pay.

[00:16:42] So the pay has to be, you know, pretty good from an hourly rate.

[00:16:46] Doesn't have to be ridiculous, but it can't be below market.

[00:16:50] And then third, and this is the most important part of cost, is that staffing, appropriate

[00:16:55] staffing.

[00:16:56] There's been studies that I've seen where it demonstrates that when you understaff a program

[00:17:01] and the doctors are seeing well and above 15, 17 encounters per 12-hour period, the hospital

[00:17:08] actually sees a decline in revenue because when the hospital has become busy, they're

[00:17:12] not going to sacrifice patient care.

[00:17:14] And so you don't see bad outcomes.

[00:17:15] What you see is bad documentation.

[00:17:16] And so that, of course, is reflected in revenues.

[00:17:20] You can provide the best care possible and the patient can have all the acuity and diagnoses.

[00:17:25] But if it's not in the medical record, you're not going to be paid for it.

[00:17:28] It's just how it is.

[00:17:30] So convincing doctors that, hey, we have these contracts where they're protected.

[00:17:34] Typically, we say if there's more than 16 patients per doctor in total for the service.

[00:17:40] So for example, a two-doctor model, if the service was 33 above the 32 threshold, we would

[00:17:46] be able to add an extra doctor.

[00:17:47] And we can bring one in.

[00:17:49] And so that allows the doctors to start with, you know, 13 to 15 patients is typically our

[00:17:55] goal.

[00:17:55] And maybe they have, you know, three, four admissions on a busy day, maybe five admissions

[00:18:00] during that longer shift.

[00:18:01] But they have time throughout that day.

[00:18:04] And so they can manage that time strategically, you know, to provide quality care, document,

[00:18:09] have lunch, all this other stuff.

[00:18:11] Yeah.

[00:18:11] No, I appreciate that, David.

[00:18:13] And the best thing about your approach and the credibility that comes with a practicing

[00:18:19] hospitalist that understands the business, that has existing contracts with multiple

[00:18:25] hospital systems is like, you're not just making this stuff up.

[00:18:29] Like, you know the problems deeply.

[00:18:31] You know how to resolve those doubts when they come up.

[00:18:34] When they do come up, they pose challenges.

[00:18:36] But eventually you turn the corner and then you're able to add value.

[00:18:40] And so that's what's been able to make you guys successful.

[00:18:43] I really appreciate you sharing that.

[00:18:44] Look, we're here at the end, man.

[00:18:46] I want to continue.

[00:18:47] But I want to give you a chance to plug your company.

[00:18:50] Where can physicians reach out to you?

[00:18:52] Where can health systems reach out to you?

[00:18:54] And what closing thought would you leave them with?

[00:18:57] So to reach out to me, just you can email me at david.rosen, R-O-S-E-N, at opensourcemd.net.

[00:19:04] And the closing thought I would say is that if your system is struggling or if you're as

[00:19:12] a physician, if you're looking for a way to have independence, feel valued and work

[00:19:17] in a format where you can practice quality medicine.

[00:19:19] Our company is there to really fix a lot of the issues or problems in healthcare staffing.

[00:19:25] It gives the doctors the ability to find that independence and be happy in what they do.

[00:19:31] And it takes a lot of pressure off of hospitals as far as where they're going to find their

[00:19:35] workforce, how they can adapt their workforce to changing patient volumes, you know, how

[00:19:41] they can grow their services in the hospital and use people that are really vested in their

[00:19:45] hospital to do it.

[00:19:46] But it just takes administration and doctors to think a little bit differently and that

[00:19:51] you can have a scenario where everybody wins.

[00:19:53] Great call to action there.

[00:19:54] Folks, get in touch with David, Dr. David Rosen, founder and CEO of OpenSourceMD.

[00:20:01] We'll leave his contact information as well as the company's contact information in the

[00:20:05] show notes.

[00:20:06] So make sure you check that out.

[00:20:07] Appreciate y'all tuning in.

[00:20:09] Now's the time to really take a look at where you're at in your career or where you're

[00:20:13] at in your service.

[00:20:14] If you're working at a hospital, running a department, this is the time to take action on something

[00:20:19] that could really make a difference for you.

[00:20:21] And David, thanks for joining us.

[00:20:23] This has been a ton of fun.

[00:20:24] Thank you for having me.

[00:20:25] I appreciate it.

[00:20:26] My pleasure.